Capital and labour markets - COFFEE-TEA: Difference between revisions
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The macroeconomic closure assumes full employment of the factors of production (capital and labour). Savings equals investment in the general equilibrium, but regionally the imbalances are closed by a surplus (or deficit) in the current account. An endogenous real exchange rate clears the current accounts and the capital account decreases exougenously in the long-run. Capital stock evolves at each period with the formation of new capital that depends on the investment level in that period and the capital depreciation rate, as described in | The macroeconomic closure assumes full employment of the factors of production (capital and labour). Savings equals investment in the general equilibrium, but regionally the imbalances are closed by a surplus (or deficit) in the current account. An endogenous real exchange rate clears the current accounts and the capital account decreases exougenously in the long-run. Capital stock evolves at each period with the formation of new capital that depends on the investment level in that period and the capital depreciation rate, as described in <xr id="eqn:TEA_eq1"/>. | ||
<equation id="eqn:TEA_eq1"> | |||
<math>K{_{r,t}} = I{_{r,t}} + (1 - \delta{_r}) K{_{r,t-1}}</math> | <math>K{_{r,t}} = I{_{r,t}} + (1 - \delta{_r}) K{_{r,t-1}}</math> | ||
</equation> | |||
where: | where: | ||
<math>K{_{r,t}}</math> is the capital stock in region ''r'' and time ''t''; | |||
< | <math>I{_{r,t}}</math> is the investment in new capital goods in region ''r'' and time ''t''; | ||
<math>\delta{_r}</math> is the depreciation rate of capital in region ''r''.{{ModelDocumentationTemplate | |||
< | |||
|IsEmpty=No | |IsEmpty=No | ||
|IsDocumentationOf=TEA | |IsDocumentationOf=TEA | ||
|DocumentationCategory=Capital and labour markets | |DocumentationCategory=Capital and labour markets | ||
}} | }} |
Revision as of 20:37, 18 December 2018
The macroeconomic closure assumes full employment of the factors of production (capital and labour). Savings equals investment in the general equilibrium, but regionally the imbalances are closed by a surplus (or deficit) in the current account. An endogenous real exchange rate clears the current accounts and the capital account decreases exougenously in the long-run. Capital stock evolves at each period with the formation of new capital that depends on the investment level in that period and the capital depreciation rate, as described in <xr id="eqn:TEA_eq1"/>.
<equation id="eqn:TEA_eq1"> </equation>
where: is the capital stock in region r and time t; is the investment in new capital goods in region r and time t;
is the depreciation rate of capital in region r.
Corresponding documentation | |
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Previous versions | |
Model information | |
Model link | |
Institution | COPPE/UFRJ (Cenergia), Brazil, http://www.cenergialab.coppe.ufrj.br/. |
Solution concept | General equilibrium (closed economy) |
Solution method | The COFFEE model is solved through Linear Programming (LP). The TEA model is formulated as a mixed complementary problem (MCP) and is solved through Mathematical Programming System for General Equilibrium -- MPSGE within GAMS using the PATH solver. |
Anticipation |